Will Chicago Be the Largest U.S. City to Declare Bankruptcy?

  
Via:  badfish-hd-h-u  •  one month ago  •  21 comments

Will Chicago Be the Largest U.S. City to Declare Bankruptcy?

S E E D E D   C O N T E N T


The city of Chicago is in dire fiscal and financial straits with an almost billion dollar budget deficit, bonds rated at junk status or below, numerous extremely costly legal judgments, a shrinking tax base, and unfunded public pension liabilities to the tune of an astonishing $42 billion.

Other than that, it's a great place to live.

The state of Illinois has its own financial troubles, so the city can expect little or no help there. And good luck getting a federal bailout through the GOP Senate and signed by a president who's been called a "racist" by the mayor.

The shrinking tax base is clear proof that citizens are already over taxed. And since it's Democrats in charge, there won't be much cutting of city services.

The only option for Mayor Lori Lightfoot and the city council is restructuring the city's massive debts. In other words: bankruptcy.


RealClear Politics:

The city needs to lower taxes to start growing again, but lower taxes would mean Chicago can no longer service its debts.  Federal law offers a procedure for reducing those debts by commencing a case in bankruptcy court.  A bankruptcy judge has the power under federal law to reduce the city’s liabilities, change its pensions, reorganize its functions into a more efficient ongoing structure and eliminate some of its debts — but the judge does not have the authority to raise your taxes.

Bankruptcy is a painful process because it forces creditors who facilitated the city’s failure to take a loss: bond holders, such as hedge funds, Wall Street bankers that sold the bonds and the people who are waiting to be paid for goods and services sold to Chicago, including past and current municipal employees.  (The city can and will still be able to offer generous pension benefits to its workers, but perhaps with a cap limiting pensions of well more than $100,000 and without the automatic 3% COLA; the exact terms of any new deal would be hammered out in negotiations under the auspices of the court.)

There are several problems with this plan. Good luck getting unions to agree to any change in the way pensions are figured. Former Illinois Governor Bruce Rauner tried for 3 years to find a way to get the public unions in the state to make some tiny reforms and he was blown out of office.

Besides, it doesn't matter what the bankruptcy judge will say or do. There is going to be pain. Just ask the citizens of Detroit who endured the process in 2013. It wasn't pretty.

Indeed, there simply isn't an alternative:

This is Lightfoot’s moment: She didn’t make this crisis, but if she seeks higher taxes and less services instead of reform, Chicago’s population and property values will continue to bleed out.  A bankruptcy restructuring is in Chicago’s future; it’s immoral to wait until empty buildings fill the downtown instead of cranes, and property values for “remainers” fall further toward zero.

Unfortunately, Lightfoot can’t make this happen on her own.  Under federal law, the state must first authorize bankruptcy filings by municipalities before the city can avail itself of this procedure to restructure its debts.

Instead of lobbying Springfield to ask residents of other towns to pay Chicago’s debts, she needs Gov. Pritzker and the legislature to grant permission for the city to pursue a prudent financial reorganization and debt reduction through a federal bankruptcy procedure.

One thing is certain: a filing of bankruptcy will totally eliminate the leverage of machine politicians to bilk the public. The machine has been in decline for at least 3 decades, but remnants of the old Daley coalition survived. But there's no hiding anymore. The machine has to go if the city is to recover and thrive again.

From my 40-year observations of the Chicago political scene, I have my doubts whether Mayor Lightfoot could do what needs to be done. The powers that be are just too entrenched. It's not only politicians, it's bloodsucking businessmen, organized crime, and now street gangs who also get a cut of the action. This is the way the "City that works" has worked for more than 90 years.

Since the days of Big Bill Thompson, Chicago has been a cesspool of graft and corruption. Can waving the magic wand of bankruptcy cure the city of almost 100 years of amoral governance?

Don't bet the farm on it.


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†hε pε⊕pレε'š ƒïšh
1  seeder  †hε pε⊕pレε'š ƒïšh    one month ago

Looks like Mayor Moonbatfoot is going to have to raise taxes.

 
 
 
KDMichigan
1.1  KDMichigan  replied to  †hε pε⊕pレε'š ƒïšh @1    one month ago
Looks like Mayor Moonbatfoot is going to have to raise taxes.

They need to elect a Republican Mayor and Governor quick, then we can blame them for years of Democrat corruption.

256

 
 
 
JohnRussell
2  JohnRussell    one month ago

You are sinking more and more into the depths of right wing media bs.  Watch out or you will soon be down to the level of a couple others here who I wont mention by name.

Illinois recently legalized gambling. After compromises are made on the rate casinos will be taxed, Chicago will have one or more huge casinos owned by the city.  50 million outsiders visit Chicago every year. Obviously a city casino will bring in a lot of money.

Chicago will be around as a great city for a long time to come. . 

 
 
 
Sean Treacy
2.1  Sean Treacy  replied to  JohnRussell @2    one month ago

A casino for Chicago is about 20 years too late.  There's already a bunch of them and tax revenue has been sliding for years.  Plus, the proposed locations are terrible. Tourists aren't going to stay or travel to sketchy neighborhoods on the periphery of the city to gamble.   Imagine how that discussion will go... "Let's go to Chicago and stay in a casino located on the far south side, near some of the most dangerous neighborhoods in the country!  That will be fun to explore!"  Unless poverty tourism is a thing, the only people donating their paychecks to the government will be the local residents. 

https://www.chicagotribune.com/politics/ct-illinois-gambling-report-20190912-ga56b2vu5bcrfaobgq53iu5w3e-story.html

https://www.chicagotribune.com/politics/ct-new-chicago-casino-feasibility-report-20190813-pworka5rzffhdme7yscb4e6n6a-story.html

 
 
 
XDm9mm
2.2  XDm9mm  replied to  JohnRussell @2    one month ago
After compromises are made on the rate casinos will be taxed, Chicago will have one or more huge casinos owned by the city.

Yeah.  Let's go to the windy city during November, December, January or February and freeze our asses off instead of to Las Vegas.  Who wouldn't think that's a great idea?

Better yet, read this piece from Belleville News - Democrat.....    they don't think it's going to happen anytime soon.  

https://www.bnd.com/news/politics-government/article232139537.html

So, in the mean time, Chicago will default on their bonds and ultimately declare bankruptcy.

 
 
 
JohnRussell
2.2.1  JohnRussell  replied to  XDm9mm @2.2    one month ago

Chicago has the seventh largest economy of all the cities in the world. It is not going to go bankrupt or disappear. 

https://en.wikipedia.org/wiki/List_of_cities_by_GDP

City/Metropolitan area Country/Region UNSD
sub‑region [1]
Official est.
Nominal
GDP ($BN)
Brookings Institution [2] 2014 est.
PPP -adjusted
GDP ($BN)
PwC [3] 2008 est.
PPP -adjusted
GDP ($BN)
McKinsey [4] 2010 est.
Nominal
GDP ($BN)
Other est.
Nominal
GDP ($BN)
Tokyo 23px-Flag_of_Japan.svg.png   Japan East Asia 1,893 (2015) [73] 1,617 1,479 1,874.7 1,997.5 [74] 1,797.9 [75]
New York 23px-Flag_of_the_United_States.svg.png   United States North America 1,717.712 (2017) [38] 1,403 1,406 1,180.3 1,056.4 [11]
Los Angeles 23px-Flag_of_the_United_States.svg.png   United States North America 1,043.735 (2017) [38] 860.5 792 731.8 632.4 [11]
Seoul 23px-Flag_of_South_Korea.svg.png   South Korea East Asia 738.6 (2017) [57] 845.9 291 233.3
Paris 23px-Flag_of_France.svg.png   France Western Europe 724 (2016) [54] 715.1 564 764.2
Osaka–Kobe 23px-Flag_of_Japan.svg.png   Japan East Asia 681 (2015) 671.3 [Note 6] 417 612.8 [52]
Chicago 23px-Flag_of_the_United_States.svg.png   United States North America 679.699 (2017) [8] 563.2 574 496.4 461.4 [11]
 
 
 
†hε pε⊕pレε'š ƒïšh
2.3  seeder  †hε pε⊕pレε'š ƒïšh  replied to  JohnRussell @2    one month ago

Your city is bankrupt due to the type of government you vote for.

It's really as simple as that.

Culpable is the word of the day.

 
 
 
JBB
2.3.1  JBB  replied to  †hε pε⊕pレε'š ƒïšh @2.3    one month ago

No, because Chicago is its own taxing authority and can thus raise its revenues at any time by simply taxing its citizens and any businesses operating within its jurisdiction making ever claiming bankruptcy entirely unnecessary and highly improbable. This is just another example of politically motivated no good low down disreputable and misleading Yellow Journalism...

 
 
 
Dean Moriarty
2.3.2  Dean Moriarty  replied to  JBB @2.3.1    one month ago

That didn’t work in Detroit. They had high taxes and went bankrupt.

https://en.m.wikipedia.org/wiki/Detroit_bankruptcy

 
 
 
MUVA
2.3.3  MUVA  replied to  JBB @2.3.1    one month ago

Then people will move and businesses will leave and the city will die. 

 
 
 
KDMichigan
2.4  KDMichigan  replied to  JohnRussell @2    one month ago
Illinois recently legalized gambling. After compromises are made on the rate casinos will be taxed

Compromises?. jrSmiley_10_smiley_image.gif

The most corrupt city in the U.S. building casino's, what could go wrong?

256

 
 
 
JohnRussell
3  JohnRussell    one month ago

Richard Porter wrote the Real Clear Politics article quoted in the seed as its basis.  LOL. 

Richard Porter is a lawyer in Chicago and Illinois’ national committeeman to the Republican National Committee. 

 
 
 
Greg Jones
3.1  Greg Jones  replied to  JohnRussell @3    one month ago

Who cares about the writer? Did you even read the story?

You're just trying to detract from the fact that every large metropolitan city governed by corrupt Democrats nationwide is in serious financial straits.

Casino revenues won't cut the mustard. Perhaps Chicago could simply add another tax to their phone bills to balance their budget.

 
 
 
JohnRussell
3.1.1  JohnRussell  replied to  Greg Jones @3.1    one month ago
Who cares about the writer?

The writer of any article has a specific point of view.  There is no actual talk of Chicago declaring bankruptcy. 

 
 
 
Greg Jones
3.1.2  Greg Jones  replied to  JohnRussell @3.1.1    one month ago

I beg your pardon.....it's right there in bold and underlined.

The only option for Mayor Lori Lightfoot and the city council is restructuring the city's massive debts. In other words: bankruptcy.

 
 
 
JBB
4  JBB    one month ago

They have a term for this sort of fake news story. They call it, "Yellow Journalism"...

 
 
 
†hε pε⊕pレε'š ƒïšh
4.1  seeder  †hε pε⊕pレε'š ƒïšh  replied to  JBB @4    one month ago

They have another name for the type of comment you left.

Yellow deflection.

 
 
 
JBB
4.1.1  JBB  replied to  †hε pε⊕pレε'š ƒïšh @4.1    one month ago

Nope! Headlines like, "Is Trump Going To Stop Beating Melania?", or, "Does Michelle Obama Have A Dick?", are classic examples of Yellow Journalism which is a dishonest ploy used dishonest authors. If he had any real proof Chicago was on the verge of bankruptcy he would present it. Instead by merely asking such a leading question he implies that Chicago is going bankrupt which it is not...

 
 
 
MUVA
4.1.2  MUVA  replied to  JBB @4.1.1    one month ago

Trump entered a criminal conspiracy with the Russians is yellow journalism would you agree.  

 
 
 
MUVA
4.1.3  MUVA  replied to  JBB @4.1.1    one month ago

Michelle does have a dick for a husband.

 
 
 
MUVA
4.2  MUVA  replied to  JBB @4    one month ago

I don't think this story came from CNN.

 
 
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